Tencent has used stealth to become a gaming superpower

TENCENT, THE world’s biggest gaming company, gives away most of its video games for nothing. Lest anyone think that the Chinese tech giant, which has a market value of $580bn, has a heart of gold, think again. It makes most of its gaming sales by encouraging players to buy virtual clothing, weapons, explosives and the like. These are usually cheap but prices increase depending on their cosmetic appeal or effectiveness in blasting an opponent to smithereens. For reasons known only to gamers, they willingly pay. During the lockdown in China, gaming revenues soared.

In the real world, that same scattershot purchasing model is one that Tencent has used to build, stealthily, a bridgehead in the global gaming industry. This year it has taken stakes in two Japanese games developers. Last year it took control of Supercell, a Finnish creator in which it had already invested about $8.6bn. It owns 100% of Riot Games, American publisher of “League of Legends”, and in the past decade has amassed stakes in more than a dozen other of the world’s hottest game developers, including Epic, owner of the smash hit “Fortnite”. According to Technode, which reports on Chinese tech firms, in that time it has made more than 100 other investments in fintech and artificial intelligence, particularly in America. It has stakes in household...



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